May 2, 2019 / 6:13 AM / 7 months ago

CORRECTED-UPDATE 2-Zalando to extend minimum order fee to more markets

(Corrects spelling of name in 7th paragraph)

* Minimum order fee planned for the Nordics later this month

* Q1 sales up 15.2 pct to 1.378 bln vs consensus for 1.377 bln

* Q1 adjusted EBIT 6.4 million

* 2019 guidance confirmed

* Shares down 2 percent

By Emma Thomasson

BERLIN, May 2 (Reuters) - Zalando, Europe’s biggest online-only fashion retailer, plans to charge delivery fees for small orders in more markets as it tries to counter a fall in average order size that has weighed on its profitability.

Founded in 2008, Zalando has grown rapidly thanks to its offer of free delivery and free returns, but it has seen average order sizes fall as customers shop more often on smartphones but spend less each time, pushing up its logistic costs.

Zalando has already introduced a minimum order value to qualify for free delivery in Italy, Spain, Britain and Ireland, helping to slow a fall in the average purchase size to just 0.4 percent to 55.9 euros in the first quarter.

“This is a first indication that the recent introduction of minimum order values is bearing fruit,” said Bankhaus Lampe analyst Christoph Bast.

Shares in Zalando, which jumped last month when it flagged unexpectedly positive preliminary figures for the first quarter, fell 2 percent on the full numbers.

Finance chief David Schroeder told reporters the minimum order threshold had had no negative side effects on customer satisfaction so far, so Zalando would extend the fees to Denmark, Sweden, Finland and Norway at the end of May.

But Zalando does not plan to introduce the charges in its core markets in Germany, Austria and Switzerland because customers there typically spend more on each order, said Co-Chief Executive Rubin Ritter.

Last month, H&M, the world’s second-biggest clothing retailer, reintroduced delivery fees for its core brand’s loyalty club members on small online orders to cut logistics costs and help restore group profitability.

Other steps Zalando has taken to boost average order sizes include adding beauty products to its range and making size recommendations to reduce the likelihood of returns.

The group’s adjusted first-quarter earnings before interest and taxation came in at 6.4 million euros ($7.17 million) on sales up 15.2 percent to 1.378 billion euros, in line with average analyst forecasts for 1.377 billion.

The company said it would expand its loyalty scheme “Zalando Plus” to France and Italy in the next 12 months, and extend it to more customers in Germany and Switzerland.

Retailers are looking to mimic the success of Amazon’s Prime subscription service, which has been shown to boost customer loyalty and encourage more frequent shopping.

Zalando also said its partner programme for brands is growing fast, with new customers joining including Calzedonia and Intimissimi, while existing brands are intensifying their usage.

Under the programme, Zalando charges fashion labels a commission to sell stock through its website rather than buying and selling them itself, offering them additional services such as logistics and marketing.

$1 = 0.8924 euros Reporting by Emma Thomasson; editing by Thomas Seythal/Uttaresh.V/Jane Merriman

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below